California Construction Employment and Spending Will Take Years to Return to Pre-Bust Levels

California’s construction industry will build fewer projects and employ fewer people compared to its mid-decade peak through at least 2015

Mar 16, 2010

California’s construction industry will build fewer projects and employ fewer people compared to its mid-decade peak through at least 2015, a leading business economist recently told staff of the state’s Air Resources Board. As a result, the financially hard-pressed industry will generate fewer emissions for at least the same period, giving California time to revise its emissions standards for off-road diesel equipment and still meet and exceed its environmental goals, construction officials explained.

“The state’s construction industry will remain a shadow of itself for years to come,” says Lynn Reaser, president of the National Association of Business Economics and chief economist for Point Loma Nazarene University. “This means fewer construction projects, fewer pieces of construction equipment in use and, ultimately, fewer emissions.”

Even if the state’s construction industry stabilized and quickly began to grow, Reaser predicts that the industry would employ fewer than 700,000 people in 2015, compared to more than 900,000 in 2006. Construction spending would also remain well below peak levels, reaching approximately $60 billion in 2015, compared to nearly $100 billion in 2006.

Contractors, construction workers, and construction officials pointed to Reaser’s outlook as they urged the state’s Air Resources Board to reconsider its current efforts to force businesses to retrofit, repower or replace billions of dollars worth of off-road diesel equipment. They added that the latest analysis of the state’s data confirms that off-road diesel emissions will be below the state’s goal for years to come.

“The evidence is overwhelming: Contractors can’t afford to comply with the current rule, and the state doesn’t need it,” says Michael Kennedy, general counsel for the Associated General Contractors of America during a public hearing convened by the board’s executive officer. “Given the choice between clean air and more jobs, or clean air and fewer jobs, it’s pretty clear which way the state should go.”

Kennedy urged the Board’s staff to delay the implementation of certain fleet average requirements until at least 2015. He noted that by then a new generation of cleaner construction equipment will be available that won’t require costly and potentially unsafe retrofits.